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Energy Transfer subsidiary selling $4B of senior notes to repay other debt

Energy Transfer LP subsidiary Energy Transfer Operating LP commenced and priced an offering of $4.0 billion of its senior notes, the proceeds of which would be used to make an intercompany loan to its parent company and pay back nearer-term debt.

The offering is composed of $750 million of 4.500% senior notes due 2024, priced at 99.646% of their face value; $1.5 billion of 5.250% senior notes due 2029, priced at 99.789% of their face value; and $1.75 billion of 6.250% senior notes due 2049, priced at 99.850% of their face value, according to a Jan. 8 news release.

Energy Transfer Operating expects to receive net proceeds of about $3.96 billion, a portion of which would be loaned to Energy Transfer LP so the parent company can fully repay its $1.22 billion term loan due Feb. 2, 2024. Energy Transfer Operating would also repay in full its 9.70% senior notes due March 15, 2019; 9.00% senior notes due April 15, 2019; and its subsidiary's 8.125% senior notes due June 1, 2019. The rest of the proceeds would be used for general partnership purposes.

The sale would be settled Jan. 15. Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, Merrill Lynch Pierce Fenner & Smith Inc., RBC Capital Markets LLC and SunTrust Robinson Humphrey Inc. are serving as joint book-running managers.

Energy Transfer Operating was the former Energy Transfer Partners LP before it merged with Energy Transfer Equity LP in a $26.55 billion deal that simplified the Energy Transfer family's corporate structure.